Nov. 2 (Bloomberg) -- Restoration Hardware Holdings Inc.,
the seller of leather couches and tables made of salvaged wood,
rose 30 percent in trading after pricing its initial public
offering at the top of the proposed range.

The shares climbed to $31.10 at the close in New York.
Corte Madera, California-based Restoration Hardware and
shareholders yesterday raised $123.9 million selling 5.2 million
shares for $24 each, according to a statement, after offering
them for $22 to $24.

The IPO price valued Restoration Hardware at $887.3
million, or 27 times net income in the 12 months through July,
making the stock about 64 percent more expensive than peers,
according to data compiled by Bloomberg. The company commanded a
premium to shares of home retailers Williams-Sonoma Inc., Ethan
Allen Interiors Inc. and Bed Bath & Beyond Inc. after annual
profit surged sixfold and U.S. housing starts climbed to the
highest level in four years.

“If you look at our track record during the last few years
where we looked at economic difficulties, our customer has
responded tremendously well,” Gary Friedman, chairman emeritus
and former co-chief executive officer, said in an interview
today on Bloomberg Television. “We continue to believe that the
customer will continue to respond in a very significant way.”

Rising Confidence

Restoration Hardware didn’t name competitors in its
filings. It operates in a market “characterized by smaller,
independent competitors” and targets consumers with household
incomes of $200,000 or higher, according to regulatory filings.

Net income at Restoration Hardware jumped in the 12 months
through July to $33.1 million from $4.9 million a year earlier
as the company closed stores and sold more online and through
catalogs, regulatory filings show. Sales increased 22 percent in
the same period to $1.05 billion. Williams-Sonoma, Ethan Allen
and Bed Bath & Beyond were valued at an average of 16 times net
income in comparable periods in yesterday’s trading.

Consumer confidence rose to a five-year high in October,
while housing starts in the U.S. surged 15 percent in September
to the highest level in four years, adding to signs of a revival
in the industry at the heart of the financial crisis. A net
171,000 workers were added to U.S. payrolls in October,
according to Labor Department statistics. The increase was more
than the median forecast of 125,000 in a Bloomberg survey.

Event Buyer

“Our customer is an event buyer -- buying a new home or
remodeling a home or acquiring a vacation home,” CEO Carlos
Alberini said in an interview. “A recovery in housing can only
help us.”

Restoration Hardware moved ahead with the offering after
Friedman announced in August he would step down as co-CEO. The
55-year-old, who has frequently appeared in the large catalogs
for which the company is known, will stay on as an adviser and
board observer, the filing shows. As of today, a letter from him
was on the home page of the company’s website, citing Don
Quixote and ending with the words “Carpe Diem.”

“I am going to remain the curator and creator of the
company,” Friedman said today by telephone. “I will continue
to be the face of the brand. This is in many ways my life and my
legacy. I will be here as long as they want me.”

Friedman’s departure came after the company investigated a
personal relationship between the former co-CEO and an employee,
according to filings. He declined to provide specifics about the
investigation.

Personal Life

“Every once in a while, people fall in love with work and
fall in love at work,” Friedman said. “That is what happened.
I never thought my personal life would be so interesting to
people.”

Friedman, who didn’t plan to sell shares in the IPO, will
own about a 16 percent stake after the offering, worth about
$138 million at the IPO price, data compiled by Bloomberg show.

The shares offered represent a 14 percent stake in the
Restoration Hardware, filings show. The company sold 4.8 million
of the shares in the sale, while management and other holders
sold about 382,000 shares, according to filings.

Restoration Hardware, previously listed on the Nasdaq Stock
Market, was bought by a group including Friedman and private
equity firm Catterton Partners in 2008. After the IPO, Catterton
will have a 32 percent stake, filings show.

Restoration Hardware is listed on the New York Stock
Exchange under the symbol RH. Bank of America Corp. and Goldman
Sachs Group Inc. led the sale.